India to give $5.4 billion worth of generic drugs for free

India has approved a $5.4 billion policy which will provide free generic medicine to its citizens.

HIV and AIDS campaigners carry placards during a protest rally in New Delhi on February 10, 2012 against the negative impact of the EU-India Free Trade Agreement (FTA) on affordable medicines across developing countries. (MANAN VATSYAYANA/AFP/Getty Images)

Initial funding for a $5.4 billion policy which would provide free generic drugs to hundreds of millions in India was allocated in recent weeks, according to Reuters.

The plan was adopted last year, but not publicized, said Reuters citing officials.

It allows public doctors in India to prescribe free generic drugs to anyone, expanding access to medicine. The plan limits doctors to a generics-only drug list, penalizing the prescription of branded medicine, potentially leaving foreign pharmaceutical giants at a disadvantage, Reuters reported.

The Indian pharmaceutical industry hailed the move, according to The Times of India, with the secretary general of the Indian Pharmaceutical Alliance saying, "Any attempt by the government to provide medicines free of cost to the weaker sections of society is always welcome. We will support this initiative by the government."

The Financial Times noted that by 2017, the initiative will provide free medicines to 52 percent of the population, 800 million of whom live on less than $2 a day. Analysts say that the plan should not be a big setback for foreign pharmaceutical companies in India, as it targets the poor and rural, while the foreign pharmaceuticals target the rich and urban.

In March, India's government permitted Natco Pharma to make a generic version of a cancer drug manufactured by Bayer, stating that the branded version of the drug was unaffordable, according to the BBC.

India has a booming generic medicine business, and exports up to $11 billion worth of generic drugs. Its patent laws give no protection to drugs invented before 1995, according to the BBC, and generic drug makers will likely benefit from the expiration of patented drugs in 2012.